I don’t know about you, but this is certainly the time when I am up to my ears in Black Friday Deals. Whether it’s emails or text messages, it’s just promotions everywhere. But this is not another Black Friday deal.
This is the first episode in a series about building your own ultimate Shopify store. We’ve spent years building out marketing for all of our clients from creatives, helping with photos, videos, sales campaigns, email marketing, you name it, and we’ve taken that to a point where we’ve scaled, and help everyone as much as we can to have a better online buying experience. If there’s one thing we’ve learned in the last couple of years, it’s that there are more people trying to do the right thing by having a great digital online experience for their customers. And today, it is absolutely number one.
In the coming series, we’re going to talk about tips and training so that your customers can have a better online store, a better customer experience, and how to improve things so that you can have better sales and better ability with your customers. You’ll learn about the different apps, tools, and software that we have used and found success with, and really show you the best ways to get the most out of them. I’ll also be discussing the things that have come out of our own marketing lab, and some of the projects that we work on ourselves, and the sandboxes that we used to test these. You’ll learn about case studies and success stories that we’ve had with some of our clients’ stores and some of the things that we’ve learned along the way, so that you don’t have to go through that headache as well.
Giving discounts is a tactic, not a strategy
November is the month that really shifts gears. There are some companies that are counting on the next month, two months, or even a couple of weeks to account for a vast majority of their sales for the entire year. There are other companies that are starting to wind down or even build up into what the best New Year’s resolution is going to be, and how their product can be a part of it. Whatever the case may be, in just a blink of an eye, it’s going to be next year.
January 1st is closer than we think, but it’s not about what you make from Black Friday Sales, or what you sell on Cyber Monday sales. It’s really about what you can learn from this time so that you can take that knowledge into the following year with momentum. Starting January 1st, the rules have changed, and we know that all of the different companies that start properly and plan properly are going to be in much, much better shape. This is certainly not another Black Friday deal.
What we mean by that is the majority of the sellers who are building their stores based on tons of sales happening from Black Friday and Cyber Monday are really hurting themselves during the rest of the year with their marketing. When you have customers that are coming to you, and you are giving away so many discounts, it’s not a strategy. It’s just a tactic for you to get a new customer at a low price, but when you think about it, it’s actually costing you a lot. You pay more in advertising, and you lose money because you’re giving up more margin.
While you feel like you are winning a customer over from one of your competitors, it’s really hard to build loyalty when someone is coming to you because you give discounts of 80% off. That’s a tactic, but it’s not a strategy that you can build on through the rest of the year. And the reason for that is a bit scientific.
Whether you are advertising on social media with Facebook ads and Instagram ads, looking at your Google ads, or looking at YouTube ads or your contextual ads running within different native content sites, all of those different pixels that you have installed on your site are looking for client data. If the vast majority of your customers are coming at a time when there are massive discounts being offered, then your advertising is focused on finding more customers that look like those people, those bargain hunters, also known as ‘Discounters’. These people are not going to buy from you in March. They are not going to buy from you in May. You have got to get through Black Friday and kind of forget about it, but also learn from it.
The Important Sales Metrics
Your Black Friday is going to happen just like everyone else’s. People may buy from you, people may not, and you will discover a lot of information that you can learn from, and you will be able to answer some of the questions about what to do next.
Look back at your November sales recap and compare it against your sales in different months. Pull the following numbers and see what you can find out.
1. Customer Acquisition Cost – The first is CAC, or customer acquisition cost. Take into account what it costs you to get new customers in the door. Did you have to spend more on ads? Did you have additional creatives that were made? How did you get those customers, and at what cost was it to acquire each new one?
2. Average Order Value – The second is looking at your average order value. This is something that can completely depend on what your promotions are. You may think that it’s a great month due to the huge bump in your AOV, but it might actually mean that you’re doing a volume discount where you were giving a third item for free, or a BOGO offer. Do an honest assessment of what the promotion did to affect your average order value.
3. Return on Ad Spend – The next is looking at return on ad spend. Determine if you have a strong return on the money that you spent versus the average order value. Would you be changing the channels that you used in your marketing or not? Was it really, really good? This is where you can understand if it was money well spent on advertising or not.
4. Return on Investment – The next is looking at overall ROI, and this is where a lot of people see November as a hard month, where that profitability is down because of Black Friday, and because of discounts. Now, there are those who see it in a different light and say they actually had a great promo that included a free item or a free upgrade instead, so they’re not losing anything. They think that they’re winning because there are so many people buying right now. And that would be fantastic.
But if you want to know if you really got a return on your investment, take a really good look at the numbers and do a comparison.
5. Lifetime Value – The last one is lifetime value. This is when you look at what you’re going to do in order to attract new customers during the fastest growing time of year, and try to get them to buy a second time. That is what this is all about: lifetime value or LTV, is all about figuring out how to build a consistent revenue stream with your customers so that they buy from you on a regular basis. LTV is something that is determined based on what cycle is the reasonable length of time before it’s time for them to buy again. For some people, this could mean that you typically have a customer for a year where they’re buying something in 12 installments, or they have 12 things to buy once per month, or they have three things to buy throughout the year, and then that’s it, it’s done.
Others have a much longer lifespan, and sometimes it can be really hard to predict. To predict that the average lifespan of a customer is eight years, you have to be in business for a lot longer than eight years. The thing is, many of us are just starting and we have only had our stores for a year or two or three. But you can look at industry averages and start to get an idea.
Recently, one of the local cable companies published a study saying that their average customer was with them for 18 and a half years. It might sound unbelievable, but it shows that there’s very low churn in industries where people have a huge vested interest in staying. Regardless of them having a service term of two years or three years, they’re not going to be looking at it in the way of saying, “I’m going to switch every couple of years,” because it wouldn’t make sense for them to do that.
What are you going to do next?
Lifetime value takes us to the most important part: what are you going to do next? I’m sure you’ve got a lot of questions. You might be seeing a lot of sales right now, and you’re wondering if you can sustain it?
Well, I want you to look at it this way. Look at the numbers for your Black Friday sale, go back into your store stats, and figure out each week, and then take your top ten weeks of all time. Was this the best week ever? Did you have another week that was great? You are always going to have a 2nd, 3rd, and 4th week, especially if your store has been operating for more than one week. Figure out those top ten weeks, and then look at what you did in those other weeks that weren’t Black Friday that generated some success.
The second is, “Who bought from me?” These customers are new. Where do they come from? You must have advertised to them, but who are they? And how different are they from your existing customers? Can you rely on them for continued sales in the future, or are they just coming for deep discounts? More importantly, was this a Christmas gift? Was this a present for somebody that isn’t actually the end user? If I were to go to this person, am I actually getting a person who purchased and used our product? Or did the customer purchase it, but give it to someone else? How do we find that end user?
The third is looking at it and saying, “This is awesome. I’ve got your customers. I want them to buy from me again. How do I do that?”
And so let’s get into that a little bit. So what I really see as the opportunity for Black Friday is to learn and understand what you can do next. You’ve got a little bit of downtime. The holidays are still here, it’s busy, but you do technically have four weeks to plan until the new year. The first thing you should do is look at the products that you sell on your site and determine what is the typical usage timeframe now. This can be different for everyone.
Frequency of Consumable Products
In some cases, you could be selling consumables that have a specific two-week timeline for one month before it needs to be replenished. Or we have a few products that we sell to our clients that are consumable in 60 days. If somebody were to consume these products as recommended, it’s going to be 60 days for that bottle of soap to be used up, or for that shampoo to be used, or for that supplement to be taken. We know that’s where we can start seeing this as the next time that person should buy. Take into account that information. It has nothing to do with sales and everything to do with your product and understanding when someone should buy next.
What is frequency? Is it a bottle of supplements that takes 60 days to take all of them, or is it a six-month supply? That will affect looking at your LTV and understanding if you actually have something that makes more sense to incentivize loyalty. This will also give you a much more consistent sales process that you feel like you can win all the time.
Study your customer list
The next part of it is looking through your customer list. You have all of your stats from November, you understand all your products, and you’ve got all these new customers. The following steps are processes that I want you to put into place so that you can start winning with everything that you do.
1. Filter out the one-time buyers. The first is taking that time frame and looking at all of your customers that you’ve had over the last year or even longer who have only bought from you once. Between your Black Friday customers and the rest of your customers that have bought from you once, if you can confidently say that they should be buying from you again, think of an offer that you want to give them that will entice them to buy from you again. Take into account your customer acquisition cost, and that should give you a pretty good idea of what it costs when you get them as a customer for the first time.
Since you already know that they’ve already had a good buying experience from you, and they’ve already consumed your product or they’ve bought it for someone else, we know that they’re comfortable with you. You don’t have to build that anymore. You should be able to sell to them for much less than your customer acquisition cost.
2. Tailor-fit your offer. Create an offer that goes somewhere from your typical promo up to what the CAC was, and figure out what that number is. It might feel like it’s a really, really deep discount to you, and that might not be the best way to do it, but it is very specific in terms of who you’re offering it to. You are only offering it to customers who have bought from you before, and you’re only doing it this one time. This is a way to incentivize loyalty instead of building first-time customers. We know what you’re doing is working to get first-time customers. Now we have to figure out what you’re going to do to get them to purchase from you again repeatedly.
So that’s what you want to be able to do: look at that frequency and understand how many of those people you have, split the next groups into the following categories:
- Those who are within the window for re-buying and consuming your product,
- Those that are a little bit too old because they haven’t repurchased from you years after they’ve finished their product. It’s just like starting over with the customer again. It’s not as good of an opportunity as someone who bought from you nine months ago and hasn’t bought again yet. That’s a good window.
3. Timing is important. If you want to get them to buy again, use the information you have, such as their email address or mobile number. Give them an offer and a timeframe, and get them in the door. You can send that off as a post-Black Friday deal, and you can get them in the door before the end of the year. Make sure something is customized to them, but also set an expiration date on their coupons. This should help you get more revenue, so that it’s not just limited to Black Friday.
4. Target customers who purchased for the holidays. Black Friday sales might be consumed between the time of purchase and the end of the year because of those gifts that are being given. There’s so much shopping done as presents on Black Friday, and you can’t assume that someone’s going to open the box and start using it right away.
Timing is important here as well. We know that these Black Friday shoppers came to you after hunting for a deal. What you need to do is to get them switching from Deal Hunter to “Concierge service”. You want your offer to arrive before they start hunting for that deal. You have a window of about five weeks from now until the end of the year. Determine when you want to send that follow-up email, as that same time frame is what you said before and established. Set it at the same time, give the same offer to incentivize a second purchase. Remember, you want to build this habit and build this idea of them always coming back to you. That kind of ‘Concierge Service’’ is something you want them to start being accustomed to. The idea that says, “Oh, this is going to be served on a platter for me. I’m going to take it before they start looking at the competitors.” That’s why that time frame is so important.
4. Target customers who purchased regularly. Now, the next thing that you want to be able to do is craft similar types of offers for people who have purchased from you for 3 or 5 or even more times. These customers now have a frequency habit. What do you have that you can offer them in order to come back?
Now this one is structured a little bit differently. The customers who have bought from you consistently, such as three purchases in three months, three purchases in six months, who are buying on that typical frequency, you don’t want to be giving them a super discount deal because you know that the habit is already built into them. But what you can do is give a promotion to those who may have bought from you three times over the last four years, and you want to get them back into the proper cycle. Take that similar approach, and create an offer to get them back into that cadence of buying from you regularly.
Learning and Improving is Key
The last part of it is what you want to learn. Whether it’s learning today for next year’s Black Friday or learning today for your next promo that’s going to come up, we want to be able to take advantage of what somebody can tell you about your business. You’ve got nothing to lose when you’re talking to your customers. They want to be a part of what you do. They want to be able to buy into your business, and they have already started to support you. Take what you can and make the most of that by asking them the questions that you were dying to learn from them.
Get Feedback
Set up a simple questionnaire, and list all of the questions that you want to be able to have. Put it into Typeform. It looks great, and it’s simple, and you can add different types of questions or even upload images that can be of your products. Set it up quickly so it can be completed in less than a minute. Then schedule your survey when it’s supposed to go out. If you’re doing a refresh for the coming New Year, schedule your survey to go out towards the end of the year. Once you’ve got that squared away, start sending out your questionnaire to get feedback.
Give Incentives
The best opportunity for you to do this is by giving people an incentive by doing some sort of giveaway. You could do a raffle draw by sending them the email survey and giving them 7 to 10 days to provide their feedback to be eligible for the draw. Prizes could be some sort of gift basket or something that’s related to your store, such as a gift card or a special item.
The trick is that, since you know that not everyone is going to finish the survey, it gives those who finish the survey a much better opportunity to win. This is a really quick and simple way for you to start building up how much information you can get about your customers. What did they find based on volume? Why do they buy? Who are they? Where are they from? And you can start learning more about how they are going to be a bigger part of your business moving forward.
To add to this, your emails can also be used to incentivize the second purchase, the third purchase, and the fourth purchase, and those can actually be automated, so you don’t have to think about it. This is something you do once, and then send it and forget it.